Public affairs: What the invisible hand of the news market leaves all too invisible

Published in Current,, May 17, 2010

Among the speakers at the FCC’s Future of Media Workshop on noncommercial media, April 30 [2010], DukeUniversity public policy specialist James T. Hamilton presented a straightforward economic explanation for the ongoing and deepening shortage of good public affairs programming. This article is based on his remarks.

Hamilton

Public affairs is an important kind of programming that warrants special attention from public media. Economists would say the market for news and discussion that helps keep our democracy healthy is suffering a historic market failure.

If you think about what people want from media, you’ll find that people look for a number of different kinds of information. I count four types of information demands, which are related to basic roles that constitute individuals’ lives:

Producer — How could I do my job better?

Consumer — How can I find a particular product?

Entertainment consumer — What things are interesting to know? and

Voter — How can I be a better citizen?

The markets for the first three types of information work pretty well, because if you don’t get the information, you don’t get the benefit. So, if you are looking for a car, you might end up on Edmunds.com. If you are going to go to a movie, you might go to IMDB, Rotten Tomatoes, Movies.com.

Think, though, about that fourth type of information—the type of information that helps you be a better voter.

Even if more information would help you make a better decision, and even if you care deeply about particular issues, the probability that you will be the decisive voter in an election, unless you are a Supreme Court justice, is very tiny. Responsibility is so diffused that for most people the payoff for investing in public affairs information is negative. The public policy scholar Anthony Downs gave that phenomenon a term. He called it “rational ignorance.” Most people, most of the time, are comfortable to remain rationally ignorant about the details of politics from their perspective.

As an economist, I need a theory that explains why, despite this situation, there’s enough demand for public affairs information that there are media people who make their living providing it. I think this demand comes from three D’s — what I call Duty, Diversion and Drama.

Duty: Some people feel they have a duty to become informed about politics and a duty to vote. I happen to be one of them and I am sure that many of the people in public media feel the same way.

Diversion: To the second set of people, C-SPAN and PBS NewsHour are treats that satisfy their curiosity, giving them a detailed understanding of how the world works. They find the details of politics very entertaining. Again, some of those people are likely to be in nonprofit media.

Drama: For the third set of people, if you want to talk to them about politics, you have to involve drama. That turns politics into human interest, candidates into celebrities and campaigns into personal triumphs and tragedies.

People consuming public affairs coverage because of duty or a fascination with policy create a demand for news with context, details, debate, and reason. But those watching public affairs in search of drama create a demand for covering politics as a horse race or morality tale with winners and sinners.

These treatments of politics don’t provide the more complete understandings of reality and policy that help people cast informed votes.

An additional problem with public affairs reporting is that it is costly to produce. The sources of other types of information are enthusiastically open to coverage. Sports teams are eager to have media report every detail of their games; if you show up at a game, you know there is going to be a story. If you are doing investigative reporting about public affairs, however, people who have the goods are trying to put roadblocks in your way. You may dig a well and come up dry. There may be no story. So public affairs reporting may have high cost but not high demand.

Consider what this means for my hometown. I subscribe to the Raleigh News & Observer. Four years ago its newsroom had about 260 people; this year, it has about a hundred people left.

In December 2008, the newspaper did a three-day series about the parole system in North Carolina. It cost more than $200,000 to produce. They found that 580 people released on probation from North Carolina prisons had committed murders since 2000. That series has resulted in legislative changes. There will be people alive in coming years who escaped murder by probationers because of the stories in the News & Observer. But they won’t know that, and the News & Observer will not be able to monetize that benefit to society.

In the language of economics, there are true market failures involved in news coverage. One of them is that information is a public good. It is nonrival — I can consume an idea, and you can, too. And it is nonexclusive — You can consume it even if you didn’t pay for its creation.

News about public affairs has its own a separate type of information market failure. That’s because information about public affairs goes into the creation of a public good — for instance, holding government accountable. We all would like to live in a society where journalists are writing about the public school system, and we have excellent public schools, but few of us are willing to read reports every day and frequently interact with officials to generate that accountability. Readers, from their perspective, don’t take into account the positive spillovers that their reading would have on other people. From the news outlet’s perspective, deep down its managers know that public affairs, investigative and accountability coverage have a true impact on society but they aren’t able to monetize it.

In a world of increasing revenue pressures, it’s hard to do well and do good at the same time. As an economist, I see a problem of stories not told. Though broadcasting these stories would be highly valuable to society, they are expensive to produce and not in great demand.

This is less of a problem for the New York Times, which can aggregate college-educated people from across the country to support the type of in-depth journalism that it does.

I believe the greatest market failure right now—the type of information not provided—is accountability coverage about the state and local governments. A medium-size community like mine — the 26th largest media market — may not have enough people who have a strong demand for local public affairs coverage.

Production of investigative coverage often starts with beat reporting. In 2009, when I asked the News & Observer editor which reporting beats were vacated because of staff reductions, he gave me a long list:

Those beats are gone and the in-depth series, the editor told me, will be less frequent because the remaining journalists aren’t interacting as much with the people in these policy areas and aren’t getting as many tips.

Where we find a failure in the market for public affairs information, I hope that nonprofit and public media outlets will be part of the solution, making sure that important beats are covered and local and state government officials are held accountable.